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Dollar advances as investors shy away from risk

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Dollar advances as investors shy away from risk 1

By Saqib Iqbal Ahmed

NEW YORK (Reuters) – The dollar edged higher against a basket of currencies on Monday, as a burst of volatility in stock markets around the globe sapped investors’ appetite for riskier currencies.

Concerns over the timing and size of additional U.S. fiscal stimulus sent major U.S. stock indexes briefly more than 1% lower before they recovered to trade little changed on the day.

The sharp move in stock markets soured FX traders’ appetite for risk, Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto, said.

“Your high beta currencies – currencies that are highly correlated with equity markets and global risk appetites – are tumbling in synchrony with equity indexes,” Schamotta said.

Market sentiment turned more cautious at the end of last week as European economic data showed that lockdown restrictions to limit the spread of the coronavirus hurt business activity.

The U.S. Dollar Currency Index was 0.19% higher at 90.396, after rising as high as 90.523, its strongest since Jan. 20.

The euro was down around 0.28% against the dollar. German business morale slumped to a six-month low in January as a second wave of COVID-19 halted a recovery in Europe’s largest economy, which will stagnate in the first quarter, the Ifo economic institute said on Monday.

The Australian dollar – seen as a liquid proxy for risk – was 0.16% lower against the dollar.

U.S. stocks have scaled new highs in recent sessions even as concerns about the pandemic-hit economy remain. Investors are trying to gauge whether officials in U.S. President Joe Biden’s administration could head off Republican concerns that his $1.9 trillion pandemic relief proposal was too expensive.

Despite the dollar’s recent rebound – the dollar index is up about 1.3% since early January – analysts expect a broad dollar decline during 2021. The net speculative short position on the dollar grew to its largest in 10 years in the week to Jan. 19, according to weekly futures data from CFTC released on Friday.

The U.S. Federal Reserve meets on Wednesday and Chair Jerome Powell is expected to signal that he has no plans to wind back the Fed’s massive stimulus any time soon – news which could push the dollar down further.

Sterling strengthened on Monday against the weaker euro as Britain’s COVID-19 vaccine rollout over the weekend offered support to the British currency.

(Reporting by Saqib Iqbal Ahmed; Editing by Andrea Ricci and Sonya Hepinstall)

Finance

The Benefits of Starting A US Non-Profit: The Latest Tax Regulations

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The Benefits of Starting A US Non-Profit: The Latest Tax Regulations 2

Starting a nonprofit organisation can be a very effective way of significantly improving your society’s welfare, and truly assisting those in need. Ultimately, however, understanding all the prerequisite steps mandated to start a nonprofit– as well as the legal obligations and privileges that can be associated with such a process, is crucial before fully committing to and moving forward with your business plan.

Growing a prolific, successful, and impactful non-profit can be a very tedious process and can commonly involve years of consistent effort, diligence, and determination. Consequently, this article will take a deep dive into the relative statutory and federal legislation and critically analyse the plethora of economic, monetary, and social benefits that starting a nonprofit can bring in for you.

Non-profit Organisations: A Quick Overview

Regardless of whether your goal is to address a particular societal issue, form a trade organisation or perhaps create a social club, if you are looking for the opportunity to earn a profit on top of accomplishing your stipulated goals, forming and operating a nonprofit organisation may be the way to go.

Contrary to most social clubs- which are formed to solely provide benefits for their specific members, nonprofits are generally created to provide benefits to the general public. These can include corporations created for educational, scientific and charitable purposes and- as we will further analyse below, are commonly exempt from paying corporate income taxation in accordance with Section 501(c)(3) of the Internal Revenue Code.

The Financial and Structural Benefits of Starting a Non-profit

As briefly touched on above, forming a nonprofit organisation can provide a plethora of benefits for you, these include:

  1. Tax Exemptions- companies that are categorized as ‘public charities’ in accordance with section 501(c) of the Internal Revenue Code are generally exempt from paying corporate income tax on a state and on a federal level. Additionally, after a company has obtained their aforementioned ‘tax exempt’ legal status, a person’s or company’s monetary donations to them is tax-deductible.
  2. Grant Opportunities- There’s a prolific amount of both public and private bodies that unilaterally limit their charitable donations and grants to public charities only. This is because nonprofits can- and commonly do, offer tax deductions to such individuals or corporate entities on an exclusive basis.
  3. Unique Corporate Structure- A nonprofit organisation operates as its own unique legal entity- completely separate from its owners and founders, and consequently is in a position to place its own interests and corporate ethos above the interests of the persons that may be associated with it.
  4. Limited Liability & Perpetual Existence- On top of having a statutory right to exist in perpetuity, nonprofits also have limited liability under the law. Therefore, any damages that may arise from potential legal disputes are limited to the real assets of the actual nonprofit, and not the assets of its founders and/or owners (subject to specific legal exemptions).

Final Overview: The Potential Disadvantages of Forming a Nonprofit

Despite all the advantages laid out above, it should be duly noted that there are a couple of potential disadvantages to forming a nonprofit that you may want to consider before moving forward with your plan.

Firstly, the process of forming a nonprofit can take a significantly long period of time and this is commonly associated with a great deal of both effort and capital. Moreover, in order to apply for some of the benefits listed above- including federal tax exemption, a monetary fee is required and the process also often needs a present attorney or corporate accountant to serve as a corporate consultant.

Furthermore, there are a couple of practical disadvantages to starting a non-profit organisation. These include: a) excessive paperwork- as all nonprofits are legally required to keep detailed analytical records of their practices and submit them to their relevant state de[artment and to the IRS, and b) limited personal control over the organisation- this is particularly the case in states that require nonprofit organisations to have more than one director.

Finally, nonprofits are commonly subject to prolific levels of public scrutiny- especially in relation to their finances, which may act as a disincentive for some private individuals.

Overall, starting a nonprofit can bring in a plethora of economic, monetary, and social privileges for the individuals involved, and- although the process can come with a few potential inconveniences, they are arguably a small price to pay. Companies like TRUiC advise on the varying benefits of different states when it comes to US formations. It is worth conducting thorough research before making your next move.

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Finance

Bitcoin rises 5% to $50,942.58

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Bitcoin rises 5% to $50,942.58 3

(Reuters) – Bitcoin rose 5% to $50,942.58 on Wednesday, adding $2,426.23 to its previous close.

Bitcoin, the world’s biggest and best-known cryptocurrency, has risen 83.7% from the year’s low of $27,734 on Jan. 4.

Bitcoin has fallen 12.7% from the year’s high of $58,354.14 on Feb. 21.

Bitcoin’s price soared this year as major firms, such as BNY Mellon, asset manager BlackRock Inc, credit card giant Mastercard Inc, backed cryptocurrencies, while those such as Tesla Inc Square Inc and MicroStrategy Inc invested in bitcoin.

Ether, the coin linked to the ethereum blockchain network, rose 7.18 % to $1,595.64 on Wednesday, adding $106.84 to its previous close.

(Reporting by Bhargav Acharya in Bengaluru; Editing by Chris Reese)

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Sunak gives UK economy a new boost to see out COVID crisis, tax rises ahead

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Sunak gives UK economy a new boost to see out COVID crisis, tax rises ahead 4

By David Milliken, William Schomberg and Andy Bruce

LONDON (Reuters) – Finance minister Rishi Sunak delivered what he hopes will be a last big spending splurge to get Britain’s economy through the COVID-19 crisis, and announced a corporate tax hike from 2023 as he began to focus on the huge hit to the public finances.

Sunak said in an annual budget speech on Wednesday that the economy would return to its pre-pandemic size in mid-2022, six months earlier than previously forecast, helped by Europe’s fastest coronavirus vaccination programme.

But lasting economic damage equivalent to 3% of annual output would persist, and 65 billion pounds ($91 billion) of extra support was needed in the short term as restrictions were lifted over the next few months, he said.

Sunak’s early warning that he will demand more money from companies – and most individual taxpayers too – makes him one of the first policymakers from rich countries to set out a plan to tighten budget policy after the pandemic.

Britain’s first rise in corporation tax since 1974 will see big, profitable companies pay 25% from 2023 compared to 19% now and the overall rate of taxation in the economy increase to its highest since 1969.

But before then firms can use a two-year “super-deduction” tax break that Sunak hopes will snap them out of their pandemic deep-freeze and invest to boost short-term growth.

The government’s budget watchdog said the move was likely to bring forward investment that would have taken place later.

In his speech to parliament, Sunak repeated his plan to do “whatever it takes to support the British people and businesses” after the economy slumped by 10% last year.

Britain has also suffered Europe’s biggest COVID-19 death toll.

“Once we are on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that,” he said.

The support measures included a five-month extension of Britain’s huge jobs rescue plan, wider help for the self-employed and the continuation of an emergency increase in welfare payments.

A property tax exemption for retail, hospitality and leisure businesses will now run until the end of June, by when Prime Minister Boris Johnson hopes to have lifted most COVID-19 restrictions.

An existing tax break for home-buyers was extended by three months until June 30 and then for cheaper homes until the end of September.

PUBS AND HOUSE BUILDERS GAIN, BOND PRICES FALL

Shares in housebuilders gained on the news, with Persimmon one of the top risers in the FTSE 100, up almost 7%.

Pub firms JD Wetherspoon and Premier Inn owner Whitbread also rose more than 5%, helped by an extended VAT cut for the hospitality sector.

But British government bond prices fell sharply after Sunak said overall borrowing will be much bigger next financial year than thought just a few months ago – 234 billion pounds, or 10.3% of gross domestic product, compared with a previous estimate of 164 billion pounds, or 7.4% of GDP.

The UK Debt Management Office said it planned to sell 296 billion pounds of gilts in the coming year, well above the 247 billion pounds expected in a Reuters poll.

“The UK’s fiscal stance has become much looser, and more focused on investment, more in line with its U.S. and euro area counterparts,” Morgan Stanley economist Jacob Nell said.

“This shift changes our view of the UK. Near term, we see a stronger and more investment-focused recovery bringing forward the return to pre-COVID-19 levels of output.”

To get a grip on borrowing, Sunak’s future hikes will increase the tax burden from 34% to 35% of GDP by the mid-2020s.

“The UK is thus to become the first major economy to consider such measures,” Valentin Marinov, head of G10 foreign exchange research at Credit Agricole, said.

As well as the COVID shock, many companies are also under strain from Brexit after Britain left the European Union’s single market on Jan. 1, and the government faces the challenge of huge investment to meet its promise to create a net zero carbon economy by 2050.

UK EARLY MOVER ON TAX HIKES

Britain’s Office for Budgetary Responsibility (OBR) said the economy was likely to grow 4% in 2021, less than the 5.5% it had forecast in November, due largely to the current lockdown which began in January. The growth forecast for 2022 increased to 7.3% from 6.6%.

Sunak has already racked up Britain’s highest borrowing since World War Two, with the deficit reaching an estimated 17% of GDP in the 2020/21 financial year that ends in April.

Sunak said the corporation tax rise would still leave the headline rate lower than in the rest of the G7 group of rich nations.

Rain Newton-Smith, chief economist at the Confederation of British Industry, said the hike was “a huge jump” and that other G7 countries would be more competitive than Britain when state and federal level tax breaks were taken into account.

The Institute for Fiscal Studies said that after the tax rises, corporation tax revenues would be a greater share of GDP in Britain than in the United States, Germany, France or Italy.

Sunak also said he would freeze the amount of money that people can earn tax-free and the threshold for the higher rate of income tax at the 2021/22 level until April 2026.

($1 = 0.7161 pounds)

(Additional reporting by Guy Faulconbridge, William James, Costas Pitas, James Davey, Estelle Shirbon, Elizabeth Piper, Paul Sandle, Alastair Smout and Sarah Young; Writing by William Schomberg; Editing by Catherine Evans)

 

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